Motor City Meltdown
Divide and Conquer in Detroit
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  • Fat_Man

    How can they shut Detroit down? It is already a howling wilderness.

  • William Ockham

    It’s easy enough to be concerned about the grim fate of the pensioners. But aren’t almost all of Detroit’s municipal bonds held by other pensioners though their own pension funds, annuity companies, 401(K)s, IRA/s and just plain retirement savings accounts?

    • Andrew Allison

      Of course, but do you think that Detroit’s pensioners give a rat’s rear end about other pensioners?

  • Jim__L

    “The fact that some groups are doing far better than others sets the stage for some to approve the deal.”

    Wow. So much for fairness and equity. Now it’s just a matter of making sure your preferred side gets as much as it can.

    That’s not a good place to be, but it’s where Blue leads.

  • Herb

    Other cities hoping to borrow, not just those facing huge pension liabilities, are watching.

    As are those who would lend to them

    • free_agent

      Though cynically I’d say that what the larger situation needs is for buyers of municipal bonds to start to seriously fear the pension problems of the cities. Then the cities might be forced to address the problems now, before they get so much worse.

      • Herb

        I don’t disagree…munis from cities with unresolved defined benefit pensions should be viewed as junk even if not currently rated as junk bonds. Unfortunately due to rules governing large institutional investments (like pension funds, interestingly enough) they cannot treat them as junk and force the return to match the risk.

        However, my point was even cities without pension issues, either due to never having defined benefits pensions or having addressed the issue, will suffer when munis are force up rate wise if Detroit et al get to put bond holders to the back of the line (a la Chrysler).

  • free_agent

    You quote, “But no one seems to care much what happens to them.”

    It’s amusing but true… Even ideological capitalists are tending to shrug and say that lenders need to properly estimate the risks of bankruptcy. Only lefties really fret about people taking losses they should have been wise enough to predict, but of course lefties aren’t going to cry in this case.

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